PRICED OUT OF THE MARKET

March 3, 2008

The world's food situation is bleak, and shortsighted policies in the United States and other wealthy countries -- which are diverting crops to environmentally dubious biofuels -- bear much of the blame, says the New York Times.

According to the United Nations Food and Agriculture Organization:

The price of wheat is more than 80 percent higher than a year ago and corn prices are up by a quarter.

Global cereal stocks have fallen to their lowest level since 1982.

Prices have gone so high that the World Food Program, which aims to feed 73 million people this year, said it might have to reduce rations or the number of people it will help.

Population growth and economic progress are part of the problem. Consumption of meat and other high-quality foods -- mainly in China and India -- has boosted demand for grain for animal feed. Poor harvests due to bad weather in this country and elsewhere have contributed. High energy prices are adding to the pressures. Yet the most important reason for the price shock is the rich world's subsidized appetite for biofuels:

In the United States, 14 percent of the corn crop was used to produce ethanol in 2006 -- a share expected to reach 30 percent by 2010.

This is cutting into production of staples like soybeans, as farmers take advantage of generous subsidies and switch crops to corn for fuel.

In addition, according to the Organization for Economic Co-operation and Development, absent new technologies, the United States, Canada and the European Union would require between 30 percent and 70 percent of their current crop area if they were to replace 10 percent of their transport fuel consumption with biofuels. And two recent studies suggested that a large-scale effort across the world to grow crops for biofuels would add carbon dioxide to the atmosphere rather than reduce it.

Source: Editorial, "Priced Out of the Market," New York Times, March 3, 2008.